Denver is a city thriving on silver linings. Housing prices never sank as low as other cities during the recession and bounced back to all-time highs. Cranes dot the skyline. The city is a top destination for the under-35 crowd, and 2,600 households a year move in.
A dark cloud over this success, though, is the inaccessibly high cost of housing that threatens to exclude the very diversity that makes Denver so appealing. Affordability is a concern for the well-being of families, but also necessary for a vibrant economy. When a lack of affordable housing has workers commuting long distances, it reduces productivity, raises transportation costs, and a recent survey shows that our prices may give employers considering relocating here pause.
So, how does a future-thinking city respond? Most cities invest federal and local funds into affordable housing, providing critical apartments for low-wage working families, seniors and the homeless. Denver is one of only eight similar cities without a locally funded housing trust fund, relying only on federal dollars and creative financing.
That will change with a one-time budget allocation of $3 million for a new fund. But there’s nothing dedicated for the future. The City Council has made sustainable housing funding a top priority, but leadership and support from Mayor Hancock and the community will be needed to make it happen.
Many cities also leverage private-sector development to mix affordability with market-rate housing. This works best for moderately priced housing for families earning slightly more, but who are still frozen out of high-priced markets, like teachers or health care workers.
Since 2002, Denver has had an Inclusionary Housing Ordinance (IHO) that requires 10 percent affordability in developments of 30 or more for-sale homes. While the recession slowed production, it has built — or financed through cash paid instead of building — more than 589 affordable homes. Adding those constructed by major redevelopments like Lowry and others, private-developer requirements have built more than 1,650 affordable homes in Denver.
Why is it fair to require market developers to build affordable? Because the median new home is over $150,000 beyond reach for the median Denver household, and over $200,000 beyond reach for families served by the IHO. Plus, expensive housing pushes everyone’s prices upward. And because significant public investments make new housing development possible and profitable. Billions of taxpayer transit dollars created the hot real-estate market of “transit-oriented development,” while moving the airport, improving streetscapes and parks, and upzoning for more density also created more valuable land and higher housing prices. Inclusionary housing ensures an affordable benefit from public investments, promoting mixed-income housing the market wouldn’t otherwise build.
Opposition to updating the IHO because of opposition to its market-based approach would lead to perverse results. Proposed changes would increase developer incentives to $25,000 per unit built in high-cost, high-need areas, and add flexibility like providing fewer units in exchange for larger homes. Even with an increase in the buy-out amount in high-cost/high-need areas, Denver’s ordinance would remain more moderate than most cities, which typically require twice as many units or prohibit alternatives. And the revision would move many provisions to more easily updatable regulations. Rejecting these changes wouldn’t eliminate the ordinance; it would just freeze its limitations and outcomes.
Denver faces a housing crisis of a magnitude that requires every resident and business to participate in solutions. So, the prospect of rejecting updates to the IHO — or worse, repealing it — because it hasn’t produced more affordable homes or met all the need is deeply concerning.
In housing, as in every area of policy, cities piece together tools and resources to impact as many residents as possible, while striving to do more. Private-sector alternatives that would broaden development types supporting affordable housing are worthy of study, but may face similar opposition. We cannot eliminate a tool building homes that working people need in the middle of an affordability crisis without a specific replacement that can do better. Denver deserves a vote of the entire City Council on maximizing the tools we have today, without giving up on planning for a bigger tomorrow.
Robin Kniech (robin.kniech@denvergov.org) is a Denver City Council member at-large.
